India’s Commerce Minister Piyush Goyal has voiced concerns about the impact of major e-commerce companies like Amazon and Flipkart on the country’s traditional retail sector. Goyal accused these companies of engaging in predatory pricing practices, which he claims undermine the survival of millions of brick-and-mortar stores across India.

The rapid expansion of Amazon and Walmart’s Flipkart has transformed India’s retail landscape, with both giants investing heavily to attract consumers through substantial discounts. These investments, however, have sparked controversy regarding their effects on local businesses. Indian regulations restrict Amazon and Flipkart from directly stocking and selling goods, allowing them only to function as marketplaces for other sellers. Despite these rules, small retailers argue that complex business structures used by these e-commerce platforms effectively bypass these regulations.

At an event in New Delhi, Goyal highlighted Amazon’s business practices, suggesting that the company’s significant investments in India may be utilized to offset business losses rather than improve services. “When Amazon says we are going to invest a billion dollars in India and we all celebrate, we forget the underlying story that the billion dollars is not coming in for any great service,” Goyal remarked, without providing specific evidence to support his claims. He further questioned whether the substantial losses incurred by these companies could be indicative of predatory pricing strategies, given their operational restrictions.

The broader context includes Beijing’s recent announcement of an anti-subsidy probe into EU dairy imports, reflecting growing scrutiny of international trade practices.

Both Amazon and Flipkart have not responded to requests for comments regarding Goyal’s statements. Last June, Amazon pledged to increase its investments in India to $26 billion by 2030, with a focus on its cloud business and merchandise exports, which are expected to reach $20 billion by 2025.

Goyal has previously criticized U.S. e-commerce giants, accusing them of leveraging their scale and capital to disadvantage smaller local stores. In a 2021 Reuters special report, internal documents suggested that Amazon provided preferential treatment to select sellers in India, which Amazon denied, asserting compliance with local laws and fairness in seller treatment.

In response to such allegations, it was announced that two prominent sellers on Amazon’s platform, accused of such practices, would cease selling their products on the site. Goyal accused the companies of creating and then closing entities to evade detection.

Amazon and Flipkart are also under investigation by Indian antitrust authorities but maintain that they have not engaged in any wrongdoing.

(Adapted from Reuters.com)